LOS ANGELES (April 17) – California’s spring housing market posted a strong start to the year as existing home sales and median price registered healthy gains in March on both a monthly and annual basis, as did every major region in the state, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.
Closed escrow sales of existing, single-family detached homes in California remained above the 400,000 benchmark for a full year and totaled a seasonally adjusted annualized rate of 416,580 units in March, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide sales figure represents what would be the total number of homes sold during 2017 if sales maintained the March pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. The March figure was up 4 percent from the 400,720 level in February and up 6.9 percent compared with home sales in March 2016 of a revised 389,770.

“March’s solid sales performance was likely influenced by the specter of higher interest rates, which may have pushed buyers off the sidelines and close escrow before rates moved higher,” said C.A.R. President Geoff McIntosh. “The strong housing demand, coupled with a shortage of available homes for sale, is pushing prices higher as would-be buyers try to purchase before affordability gets worse.”

Following back-to-back monthly price declines, the median price of an existing, single-family detached California home climbed back above $500,000 in March. The median price was up 8 percent from $478,570 in February to reach $517,020 in March, and was 6.8 percent higher than the $484,120 recorded in March 2016. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling, as well as a general change in values.

“The spring homebuying season is off to a good start, as the economic and market fundamentals remain solid for the most part,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “However, higher interest rates, a dearth of housing inventory, and slow wage growth will continue to have an adverse effect on housing affordability that is putting upward pressure on home prices, and is sure to hamper the market throughout the year.”
Other key points from C.A.R.’s March 2017 resale housing report include:

• New statewide active listings continued to decline, falling 12 percent from a year ago, and contributed to a full one-month drop in the unsold inventory index.

• The substantial decline in new listings combined with March’s robust sales brought down C.A.R.’s Unsold Inventory Index to its lowest level so far this year and the third lowest level in more than three years. The index, which measures the number of months needed to sell the supply of homes on the market at the current sales rate, dropped a full month to 3.0 months in March from 4.0 months in February. The index stood at 3.6 months in March 2016.

• The median number of days it took to sell a single-family home fell from 33.5 days in February to 26.7 days in March and was down from 29.9 days in March 2016.

• The average price per square foot** for an existing, single-family home statewide was $252 in March, $241 in February, and $232 in March 2016.
• San Francisco County had the highest price per square foot in March at $872/sq. ft., followed by San Mateo ($838/sq. ft.), and Marin ($688/sq. ft.). Counties with the lowest price per square foot in March included Del Norte ($115/sq. ft.), Lassen ($118/sq. ft.), and Siskiyou ($125/sq. ft.).

• Mortgage rates have risen since last fall. The 30-year, fixed-mortgage interest rate averaged 4.20 percent in March, up from 4.17 percent in February and up from 3.69 percent in March 2016, according to Freddie Mac. The five-year, adjustable-rate mortgage interest rates dipped in March to an average of 3.21 percent, from 3.20 percent in February and 2.90 percent in March 2016.

Students from the Cal Poly Prototype Vehicles Laboratory – PROVE Lab are designing the world’s fastest solar-powered car! The team of 60 multidisciplinary students will attempt to smash the current world record for solar vehicles by exceeding 56.75 mph at the Mojave Desert in June 2017.

Foreclosure inventory declined by 29.6 percent nationwide, and completed foreclosures declined by 42.4 percent compared with August 2015, according to CoreLogic’s August 2016 National Foreclosure Report. The number of completed foreclosures decreased year over year from 64,000 in August 2015 to 37,000 in August 2016, representing a decrease of 69 percent from the peak of 118,221 in September 2010. Making sense of the story

The foreclosure inventory represents the number of homes at some stage of the foreclosure process and completed foreclosures reflect the total number of homes lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 6.4 million completed foreclosures nationally, and since homeownership rates peaked in the second quarter of 2004, there have been approximately 8.5 million homes lost to foreclosure. “Foreclosure inventory fell by 30 percent from the previous year, the largest year-over-year decline since January 2015,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The large decline in the distressed inventory has been one of the drivers of steady home price growth which helps Americans increase their home equity to support increased spending or cushion future economic risk.”

As of August 2016, the national foreclosure inventory included approximately 351,000, or 0.9 percent, of all homes with a mortgage compared with 499,000 homes, or 1.3 percent, in August 2015. The August 2016 foreclosure inventory rate is the lowest it’s been since July 2007. CoreLogic also reports that the number of mortgages in serious delinquency (defined as 90 days or more past due including loans in foreclosure or REO) declined by 20.6 percent from August 2015 to August 2016, with 1.1 million mortgages, or 2.8 percent, the lowest level since September 2007. The decline was geographically broad with decreases in serious delinquency in 48 states and the District of Columbia.

Existing, single-family home sales totaled 425,680 in September on a seasonally adjusted annualized rate, up 1.3 percent from August and 0.8 percent from September 2015.

– September’s statewide median home price was $514,320, down 2.3 percent from August and up 6.1 percent from September 2015.

– Statewide sales of condos and townhomes fell 8.5 percent from August and were up 1.4 percent from September a year ago.

LOS ANGELES (Oct. 17) – California existing home sales ticked up in September on a year-to-year basis for the first time in seven months as a shortage of homes available for sale continues to hold back the market, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 425,680 units in September, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide sales figure represents what would be the total number of homes sold during 2016 if sales maintained the September pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The September figure was up 1.3 percent from the revised 420,360 level in August and up 0.8 percent compared with home sales in September 2015 of a revised 422,360. Home sales remained above the 400,000 pace for the sixth straight month, and the year-over-year increase was the first since January.

“While higher sales both on a monthly and an annual basis is a glimmer of good news, with most of the home-buying season behind us for 2016, it’s not enough to tip the scales for an increase above 2015’s sales pace,” said C.A.R. President Pat “Ziggy” Zicarelli. “With listings continuing to decline and demand still strong, especially at the lower end of the market, affordability will remain a challenge for would-be buyers.”

The statewide median price remained above the $500,000 mark for the sixth straight month, with minimal signs of cooling down outside of a few select markets. The median price of an existing, single-family detached California home was down 2.3 percent in September to $514,320 from $526,580 in August. September’s median price increased 6.1 percent from the revised $484,670 recorded in September 2015. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling, as well as a general change in values. The monthly price decline is primarily due to seasonal factors.

“While demand remains strong for lower-priced homes, which are more inventory constrained, sales of homes at the higher-end have slowed significantly,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “For example, sales of properties priced between $2 million and $3 million, which are the least inventory constrained, grew by high double-digits in 2014 and 2015, but the pace has slowed down to a negligible 0.2 percent increase through the first nine months of this year.”

• Current home prices in the state are still 13.5 percent below their previous peak, though most parts of the San Francisco Bay Area have already reached new all-time highs.

• C.A.R.’s Unsold Inventory Index, which indicates the number of months needed to sell the supply of homes on the market at the current sales rate inched up to 3.5 months in September from 3.4 months in August. The index stood at 3.6 months in September 2015.

• Statewide active listings continue to decline, falling 3.1 percent from August and 4.9 percent from a year ago. The year-over-year listings decline is the highest since January 2016.

LOS ANGELES (April 14) – More real estate investors are turning to niche properties and away from investing in single-family homes and multifamily properties than they have in recent years, according to a CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) survey of its members about their interactions with real estate investors.

C.A.R.’s 2016 California Investor Survey found 10 percent of investors purchased commercial, land, mobile homes, or other types of properties in the past year, up from 7 percent in 2015 and 6.7 percent in 2014.

Given a lack of inventory of distressed homes on the market, the share of single-family homes being purchased by investors has been declining gradually since 2013. Seventy percent of investors purchased single-family homes in 2016, down from 78 percent in 2013.

The share of investors who purchased multifamily properties also declined slightly, dipping from 21 percent in 2015 to 19 percent in 2016.

Among the reasons investors cited for buying include good location (38 percent), followed by rate of return (30 percent), good price (17 percent), and future development potential (7 percent).

Additional findings from C.A.R.’s “2016 Investor Survey” include:

• As real estate deals become increasingly harder to find, the investment climate in California has gotten more competitive. With the listing price and final sale price nearly equal, the number of days the property was on the market has declined, and a larger share of investment properties was located outside of the urban and suburban markets they previously dominated.

• With fewer available distressed properties, the share of equity transactions has increased steadily, rising from 70 percent in 2014 to 87 percent in 2016.

• Fewer investors (62 percent) are renting out their properties in 2016, compared to last year (65 percent).

• Twenty-six percent of investors are flipping their properties, unchanged from last year, but down from 28 percent in 2014. Twelve percent plan to leave the property vacant, use it as a vacation rental, or other use.

• More than three-fourths of investors remodeled their properties, and the median cost of the remodel increased from $10,000 in 2015 to $13,500 this year.

• As a sign of optimism, the vast majority (76 percent) of REALTORS® working with investors believed the property would increase in value in one year. This also applied to the long term with 71 percent saying the property would increase in value in five years.

• Investors in 2016 are planning to hold the property for longer–an average of 8.1 years, up from 6.1 years in 2015.

• While investors own fewer properties on average in 2016 (5.6), down from 6.4 in 2015 and 8.3 in 2014, a higher proportion of them own other properties. A record share of these other properties is located outside California (15 percent in other states and 2.4 percent in other countries).

• With higher real estate prices and more investors purchasing other properties within the past year, the share of investors who obtained financing jumped sharply from 34 percent in 2015 – where it had been holding steady for the past three years – to 45 percent in 2016.

Improved economic conditions and more job availability throughout the state benefited the housing market and continued to push sales higher. Mortgage rates returning back to near record-low levels in the first half of the year, coupled with an anticipated rise in the fed funds rate later this year, may also have prompted prospective buyers to feel a sense of urgency to enter the market. The statewide sales in July exceeded 400,000 for the fourth consecutive month, and July 2015 was the month with the highest sales level since Oct 2012. The strong momentum in the first half of 2015 elevated sales in the first seven months to 407,060 (seasonally adjusted and annualized), an increase of 7.1 percent when compared to the same period of last year. After reaching the peak in nearly eight years, the statewide median price in July dipped slightly to $488,260 from the previous month, but remained close to the recent high reached in June. The median price continued to improve at a moderate rate from the previous year, with a year-over-year gain of 5.4 percent in July 2015. While the median price continued to improve from the previous year, the rate of increase has been decelerating steadily in the last twelve months. The combination of modest price appreciations and low interest rates kept housing affordability from declining further this year in most areas, despite higher prices. In fact, the statewide Housing Affordability Index (HAI) actually rose in the first quarter of this year to 34 percent before dropping back to 30 percent in the second quarter. With interest rates expected to rise in the second half of 2015, housing affordability will become a bigger challenge for many potential home buyers, particularly for those who reside in high-cost areas such as the Bay Area. The California housing market should continue its momentum and have a solid performance throughout the rest of the year. Sales, however, could cool off slightly in the fall as mortgage rates gradually rise. With the economy growing faster and the labor market improving next year, more households will be formed as consumer confidence continues to rise. As a result, sales activity is expected to inch up in 2016. Inadequate supply in high-end areas such as the Bay Area is exerting upward pressure on prices, but home sales in those regions are simultaneously being constraint. The constraint in home sales in the Bay Area could eventually lead to a decline in the share of high-end homes sales to overall home sales, which could also lead to a further slow-down in the appreciation in the statewide median price. As such, the statewide median price is expected to increase only modestly this year and in 2016

The residential purchase agreement, C.A.R. Form RPA-CA, already contains a provision in the contract indicating that the property is being sold “as is.” The language stating this fact can be found in Paragraph 7A: “Unless otherwise agreed: (1) the Property is sold (a) in its PRESENT physical condition as of the date of Acceptance and (b) subject to Buyer’s investigation rights;. . .”

Any language in a counteroffer that just states, “This property is being sold ‘as is’ ” does not add any additional protection for the seller. The only way the counteroffer will change a provision in the buyer’s offer will be if the seller counters out a specific provision in the purchase agreement.

Example 1: In the counter offer the seller might state, “Buyer shall order and pay for all inspections and reports listed in Paragraph 4A and 4B, however Seller agrees to order and pay for items required under Paragraph 4C1 and 4C2. All the inspections and reports in Paragraph 4 must be concluded prior to ___ days before the Close of Escrow.”

Example 2: In the counter offer the seller might state, “Buyer shall order and pay for all inspections and reports listed in Paragraph 4A, 4B, and 4C. All the inspections and reports in Paragraph 4 must be concluded prior to ___ days before the Close of Escrow.”

Of course, during the Buyer’s inspection period, the Buyer may ask the Seller to repair certain requested items and the Seller may refuse if the Seller so chooses

Among REALTORS® who typically represent the buyer, 49 percent report most buyers are affected by home staging and 47 percent report some buyers area ffected by home staging.

For buyers it is easier to visualize the property as a future home (81 percent), buyers are more willing to walk through a home they viewed online (46 percent), will positively impact the value of the home if it is decorated to the buyer tastes (45percent), and buyers are more willing to overlook other property faults (28 percent).

Among sellers’ agents 34 percent stage all homes, 13 percent stage difficult homes to sell, and four percent stage only high price bracket homes. Forty-four percent suggest the seller de-clutter and fix property faults only and do not stage the home.

The median dollar value to stage a home is $675 for each home.

Among homes that are staged: 62 percent of sellers’ agents offer the home staging services to their sellers, 39 percent of sellers pay for the home before the home is listed, 10 percent of sellers pay after the home is sold, and three percent of agents’firms pay for the home staging service.

The most important rooms to be staged for buyers matches identically to the rooms that are most common to be staged among sellers—in order: living room, kitchen,master bedroom, dining room, bathroom, children’s bedroom, and guest bedroom.

Thirty-two percent of buyers’ agents believe staged homes increases the dollarvalue buyers are willing to offer by one percent to five percent. Nineteen percent say there is no impact on the dollar value, and 16 percent believe it increases the dollar value buyers are willing to offer by six percent to 10 percent.

Thirty-seven percent of sellers’ agents believe staged homes increases the dollarvalue buyers are willing to offer by one percent to five percent. Twenty-two percent believe it increases the dollar value buyers are willing to offer by six percent to 10 percent, 10 percent say home staging has no impact on dollar value, and eight percent say home believe staged homes increases the dollar value buyers are willing to offer by 11 percent to 15 percent.

“An association is entitled to impose reasonable fees to cover the extra costs of vacationers and other short-term renters, who usually use recreation areas and other facilities more than other residents and are less careful … because they are not concerned with the long-term consequences of abuse,” the Second District Court of Appeal in Ventura said.

The case doesn’t directly affect the Airbnb controversy over sub-rentals of urban housing units and their impact on housing supply and costs.

The HOA claimed (based on the own study) “short term rental units incur nearly $900 a year more in costs than those occupied by owners or long term renters”.

The association charges owners $325 a year to rent their property and imposes other fees on short-term renters and guests, including a garbage-collection fee and charges of $25 a day or $125 a week for bringing watercraft to the lake.

The fees were challenged by three owners who said they violated a state law limiting homeowners’ association fees to “the amount necessary to defray the costs”.

In upholding the ruling, the appeals court said “California law requires courts to give homeowners associations some leeway in decisions on property cost-sharing”.

The association’s lawyer, Roy Weatherup, said the ruling clarified an unsettled area of the law and vindicated his client.